Correlation Between Bond Fund and American High-income
Can any of the company-specific risk be diversified away by investing in both Bond Fund and American High-income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bond Fund and American High-income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Of and American High Income Municipal, you can compare the effects of market volatilities on Bond Fund and American High-income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bond Fund with a short position of American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and American High-income.
Diversification Opportunities for Bond Fund and American High-income
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bond and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Bond Fund is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bond Fund Of are associated (or correlated) with American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Bond Fund i.e., Bond Fund and American High-income go up and down completely randomly.
Pair Corralation between Bond Fund and American High-income
Assuming the 90 days horizon Bond Fund Of is expected to generate 1.25 times more return on investment than American High-income. However, Bond Fund is 1.25 times more volatile than American High Income Municipal. It trades about 0.28 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.27 per unit of risk. If you would invest 1,114 in Bond Fund Of on November 28, 2024 and sell it today you would earn a total of 20.00 from holding Bond Fund Of or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bond Fund Of vs. American High Income Municipal
Performance |
| Timeline |
| Bond Fund |
| American High Income |
Bond Fund and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and American High-income
The main advantage of trading using opposite Bond Fund and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, American High-income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American High-income will offset losses from the drop in American High-income's long position.| Bond Fund vs. American High Income | Bond Fund vs. Europacific Growth Fund | Bond Fund vs. Capital World Bond | Bond Fund vs. Growth Fund Of |
| American High-income vs. Tax Exempt Bond | American High-income vs. American High Income Municipal | American High-income vs. American High Income | American High-income vs. Bond Fund Of |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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